Consider the following total cost equation:
TC = 100 + 60Q -3Q2 + 0.1Q3
1. How much is the fixed cost.
2. Write the total variable cost equation (TVC).
3. Write the average total cost equation (ATC).
4. Write the average variable cost equation (AVC).
5. Write the marginal cost equation (MC).
6. At which level of production starts diminishing return (decreasing MPx)?
7. At which level of production starts stage two of production?
8. Over which range of production, the marginal product of the variable input would be increasing in the short run.
For each of the following production functions, tell if the firm would have an increasing, decreasing, or constant return to scale in the long run:
1. Q = 75 L.25 K0.75
2. Q = 100 + 50L 50K
3. Q = 50L + 50K + 50LK
Hint: for 2 and 3, give L and K some value, increase it by certain percentage and see if Q would increase by greater, lesser, or the same percentage.